Iowa Public Television


Dairy Industry Copes with Challenges

posted on December 13, 2012

U.S. retail prices declined last month, keeping the inflation boogey-man at bay.

The Labor Department’s Consumer Price Index fell 0.3 percent in November. Gasoline prices fell 7.4 percent month-over-month. That’s their largest decline in nearly four years, and the move offset a 0.2 percent rise in food prices.

Excluding the volatile food and energy sectors, so called “Core” prices ticked up 0.1 percent last month.

But some items at the grocery store have gone up dramatically in recent weeks. The cost of milk, cheese and other dairy products have risen 0.8 percent in each of the past two months alone.

And the dairy industry is weathering a “Not-So Perfect Storm” of higher feed costs, increasing competition and declining demand.

Dairy Industry Copes with Challenges

Fewer consumers are hitting the dairy aisle at the grocery store these days and that’s translating to less demand for milk.

While demand for yogurt, cheese and other dairy products is on the rise, U.S. per capita milk consumption has fallen nearly 30 percent since 1975.

One factor is increased competition. Another is the fact that children – historically large consumers of milk -- make up a smaller portion of the population.

Milk companies and retailers are looking to boost sales through a number of strategies including a push of smaller, more convenient packages and healthy-orientated varieties, including protein-enhanced products aimed at fitness buffs. And there are other threats to what once was billed as nature’s most-nearly perfect food.…  

The dairy industry is promoting natural aspects of its product to counter growth in alternatives made from soy, almonds and even water.

Retail dairy prices are not helping the industry’s case. Last year, milk prices soared 9.2 percent. This year, the worst drought in 50 years pushed corn prices to record, or near record levels.

And the USDA reports 2012 dairy consumption is down 3.3 percent – the biggest year-over-year slide since at least 1975.

The Got Milk? ad campaign started nearly two decades ago by the California Milk Processor Board, is leading the campaign to ‘get milk’ back into the nation’s refrigerators.

The board also plans to display the “Real” seal prominently on its goods to distinguish them from plant-based products.

Tags: cheese dairy dairy farmers dairy industry Got Milk? milk USDA